Who Profits from Mobile Phone Theft?

by Colin Berkshire

My second iPhone was stolen in under a year. It makes me mad that Apple makes a profit of over $100 Million a year by encouraging stolen iPhones.

Mind you, I am a seasoned international traveler. I keep my iPhone in a tethered pouch which is inside of a zippered pocket which is protected by a velcroed down flap in the lower cargo shorts. It isn’t like these iPhones are just falling out of my pants.

But when a pick-pocket in Vietnam can make 2-years wages by lifting an iPhone out of a pocket they will get pretty clever. Think about it: If you make $40K a year and you could snatch just one iPhone worth $80,000, you would get pretty clever, too. Trust me, pick-pockets are extraordinarily clever.
The Stolen iPhone market is easily a $100 Million a year, very profitable business for Apple. Do the math on how much Apple earns on selling iPhones. Then, consider that just a tiny fraction of one percent of them need to be stolen for this to be almost a billion dollar a year revenue stream for Apple.

So why do I blame Apple for thieves? Because they do nothing to stop it and everything to encourage it.

The entire stolen iPhone market should be shut down in an instant with a minimal effort on Apple’s part…

You see, a thief will immediately wipe the iPhone and do a factory reset. If you use a passcode the factory reset happens automatically. This means that the iPhone must be re-activated. It will go through Apple’s activation servers and get re-authorized. This is necessary so that they can apply the appropriate carrier lock policies, so that you can’t use your AT&T phone in Vietnam. (Verizon will politely unlock your GSM sim so that you can use it in Vietnam, which is why I am a Verizon customer.)

So Apple has the opportunity to lock down the iPhone and make it worth less than a brick. The activation server could simply say: Authentication denied. When a stolen iPhone becomes worthless then the thieves will quit stealing them. This is simple economics.

I knew my iPhone was stolen within five minutes. And, I immediately called Apple from Vietnam and informed them. But much to my surprise, they would not blacklist the phone. And, they would not even remove the GSM unlock that Verizon added. (Verizon is not allowed by Apple to remove an unlock.) I escalated the matter to an Apple supervisor, and they were very insistent that they would not stop the phone from being reactivated.

So how simple would it be for Apple to allow customers to block reactivation? It’s trivial.

Apple has a “Find My iPhone” tool. And, this allows you to lock the phone, wipe its memory, and force a re-activation. That’s all there and in place now. But they do not have an ON/OFF button that would turn off the ability to activate the phone. They could just add the ON/OFF so that the ability to re-activate the phone was stopped. Now, when your phone is stolen, it cannot be reset and be re-activated. This is not rocket science.

And, in a similar way, why does Apple allow a phone to be factory reset and be re-activated with no password being entered, when the Find My iPhone has set a password?

So here we have users who think they have control over their iPhones by being able to remotely reset a phone, wipe its memory, and apply a password. But all a thief has to do is enter 10 incorrect passwords and then re-activate the phone? Voila: two year’s salary.

The answer can only be: Follow the Money.

Having the same sort of “anti-theft” systems that car radios have would stop the iPhone theft business. And, Apple profits hundreds of millions of dollars a year by encouraging theft. When your phone is stolen you buy a new one, and that sale wouldn’t happen if the theft never happened in the first place.

I don’t mind paying $900 for an iPhone. The iPhone is just great. It’s a wonderful device. But I do object to Apple scheming to profit by encouraging theft and by ignoring passcodes during reactivation.

Rotten Apple.